Updated 5/19/2020; 9:11 A.M. EST

COVID-19 Relief

Below is a summary of relief measures available to individuals and businesses as well as links for additional information.  Please note, the interpretation of these laws and regulations are changing rapidly and are subject to change.  We are providing information to you as it becomes available and will update you with any changes as necessary.

 

  • Taxpayer Economic Impact Payment (stimulus)- Millions of Americans have already received their Economic Impact Payments authorized by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The Internal Revenue Service (IRS) continues to calculate and automatically send the Payments to most eligible individuals, however some may have to provide additional information to the IRS to get their Payments. Below is a link to the IRS info center related to these Payments.  https://www.irs.gov/coronavirus/economic-impact-payment-information-center

 

  • Recovery Rebate – Includes advance refunds of a 2020 tax credit.  Credits are $1,200 per adult and $500 per qualifying child. A qualifying child is a dependent who has not attained the age of 17. The phaseouts begin at $150,000 for joint filers, $75,000 for individuals and $112,500 for head of household filers.  The rebate will be based on 2019 tax returns, 2018 if 2019 has not yet been filed.  Overpayments will not be clawed back however taxpayers who receive a smaller benefit than they are eligible for based on 2020 income will receive the difference.  The rebate is not considered taxable income.  Social Security recipients won't need to file a tax return to receive the rebate. An individual that is 17 and older that was claimed as a dependent on a 2018 or 2019 tax return used for the purposes of this credit, will need to file a 2020 tax return to obtain the $1,200 credit and not be claimed as a dependent.  For individuals that did not have direct deposit on their 2018 or 2019 tax return used for the purposes of this credit, a check will be mailed to the address on such return.  For more information including a stimulus check calculator go to: https://www.kiplinger.com/article/spending/T063-C000-S001-stimulus-checks-2020-how-much-when-and-other-faqs.html To file simple Federal tax returns, visit: https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free?fbclid=IwAR2xSfDQirAWVRaCcwrP-qlA6Ki-sk1H2xq3JHT40BNkr292m8iac9wf0jk, For assistance, please visit:  https://www.irs.gov/coronavirus/economic-impact-payments. 

  • IRS announces significant enhancements to the “Get My Payment” tool to deliver an improved and smoother experience for Americans eligible for an Economic Impact Payment. Please visit: www.irs.gov/getmypayment

 

 

  • Payroll Tax Credit Refunds – Advance refunds are available for payroll tax credits related to required paid sick leave and required paid family leave.  The IRS is also waiving penalties for failure to deposit payroll taxes under Sec. 3111(a) or 3221(a) or if the failure was due to an anticipated payroll tax credit.  For more information contact your payroll provider.

 

  • Payroll Taxes – 50% of the 2020 employer’s share of the Social Security payroll taxes are due by December 31, 2021 and the remaining 50% by December 31, 2022.  The deferral of payroll taxes cannot be combined with the small business interruption loans. For more information contact your payroll provider.

 

  • Employee Retention Tax Credit – is a refundable payroll tax credit available to certain employers.  To qualify, business must have been carrying on business in 2020 and whose business was fully or partially suspended by a governmental authority or a business whose gross receipts declined by more than 50% when compared to the same quarter of the previous year.  If a business has less than 100 employees, all paid wages qualify for the credit.  If a business has over 100 employees, only the employees not providing services due to the closures or employees contributing to the drop in gross receipts are used in the calculation. To be considered an employee, an individual must be an active employee as of April 1, 2020.  Employees terminated or laid off prior to April 1, 2020 do not qualify.

 

Credits can be in the form of:

  • A credit against employment taxes which is equal to 50% of qualified wages (includes health insurance expenses).  Qualified wages include wages up to $10,000 for each employee therefore, credits can be up to $5,000 per employee or

  • A credit of employer gross receipts if gross receipts are 50% or less for the same quarter in a prior year until gross receipts exceed 80% of the gross receipts for the same quarter in the previous year.

 

The credit cannot exceed applicable employment taxes and must be reduced by any payroll tax credits mentioned above.  This credit will be claimed on Form 941.  This credit cannot be combined with the Work Opportunity Credit or the small business interruption loans. For more information visit: https://www.gordonrees.com/publications/2020/employee-retention-tax-credit-cares-act  https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act  

  • Additional Credits – Three new credits available to many businesses affected by COVID-19. Paid Sick Leave, Employee Retention ( explained above) and Paid Family Leave. For full descriptions visit : https://www.austinpa.com/aablog 

  • Student Loans – Employers may contribute up to $5,250 annually towards an employee’s student loans and the amount excluded from the employee’s income.  This relief does not apply to spouses or dependents of business owners.  A credit for student loan interest cannot be claimed on an individual’s tax return for any portion of a loan being paid by an employer. For more information regarding student loans visit: https://www.forbes.com/sites/zackfriedman/2020/03/26/student-loans-coronavirus/#48ffa4587b70

 

  • Retirement Plans

  • Taxpayers can take up to $100,000 in virus related distributions without being subjected to the extra 10% penalty; however, normal income taxes will still be required on distributions. Distributions are eligible through December 31, 2020.  Withdrawals are taxable over a three-year period; however, distributions may be repaid within three years without affecting retirement account caps.

  • RMDs are suspended

  • In relation to single-employer plans, contributions for 2020 minimum required contributions may be delayed until 2021.

  •  For more information visit: https://www.sgrlaw.com/client-alerts/retirement-plan-relief-in-the-cares-act/

 

  • SBA Loans – Paycheck Protection Program (PPP Loans)

  • SBA Loans – Small Business Debt Relief Program –  

  • 7(a), 504 or microloans

 

  • Emergency Injury Disaster Loans (EIDL) and Emergency Economic Injury Grants

  • Advance in the form of a Grant to be received within three days of the application to businesses harmed by the COVID-19.  The amount of the advance will be determined by the number of your pre-disaster employees prior to January 31, 2020.  The advance will provide $1,000 per employee up to a maximum of $10,000

  • Businesses must first apply for the EIDL and then request the advance of the grant funds

  • Grants are NOT repaid under any circumstance (grants are separate from the loan funds)

  • Disaster loans are available up to $2M

  • Terms are up to 30 years

  • Interest rates are 3.75% and 2.75% for nonprofits

  • First payment due under this loan is deferred for 1 year 

  • Loan proceeds can be used for fixed debts, payroll, accounts payable, and bills that cannot be paid due to COVID-19

     Note: loan proceeds are not forgiven. 

 

  •  Frequently Asked Questions pertaining to both PPP and EIDL (US Department of Treasury)

        Please visit: https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses

  • Charitable Deductions – There is up to a $300, (it is speculated this will be $600 for joint filers) above the line charitable deduction for cash donations paid to qualifying charities for taxpayers taking the standard deduction. Qualifying charities do not include donor advised funds or supporting organizations. For tax payers that are itemizing the AGI limitations have also been increased to 100% for an individual and 25% for corporations.  Deductions for food contributions have been increased to 25%.

 

  • Health plans

  • Private insurance plans must cover COVID-19 treatments and vaccines

  • All coronavirus testing is free

  • Health plans now cover telehealth and other remote care services without charging a deductible

For the CARES Act visit: https://www.documentcloud.org/documents/6819206-CARES-ACT-FINAL-TEXT.html

© 2020 Austin Associates

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